In compliance with new federal rules, the Canada Mortgage and Housing Corp. on Monday published its first set of quarterly results, something industry observers say is a good thing

In compliance with new federal rules, the Canada Mortgage and Housing Corp. on Monday published its first set of quarterly results, something industry observers say is a good thing.

Among the more salient disclosures contained in the results: refinancing activity tumbled nearly 40% following a move by Finance Minister Jim Flaherty to tighten mortgage rules this spring.

Sales of the CMHC’s mortgage insurance fell by 10% immediately after the changes were introduced, though they have regained some ground since then.

According to the CMHC, these numbers show it’s doing a good job of maintaining a healthy, sustainable housing market.

But Finn Poschmann, vice president of research at the C.D. Howe Institute, is skeptical. “The size of the drop in refinancing is surprising to the point of shocking,” Mr. Poschmann said in an email. “You could hardly have better evidence of the extent to which CMHC practices have been supporting high debt and risky borrowing by homeowners.”

A frequent critic of the organization, Mr. Poschmann argues that CMHC practices have helped inflate housing prices and encourage consumers to take on more debt than they can handle.

Experts say average household debt in this country is sitting at record levels, similar to where it was in the United States before the financial crisis.

Starting in March Mr. Flaherty instituted a number of changes to mortgage rules, including reducing the maximum amortization period for loans qualifying for CMHC insurance to 30 years from 35 years; lowering the maximum amount that Canadians can borrow to refinance their mortgages to 85% from 90% of the value of their homes; and withdrawing CMHC insurance from non-amortizing home equity lines of credit.

Mr. Poschmann authored a report earlier this year which suggested ways the federal government could fix the CMHC, the leading provider of mortgage insurance in Canada. In a letter published on its website, CMHC suggested that Mr. Poschmann’s ideas would only lead to the creation of a system like the one in the United States.

If Friday's gains are anything to go by, investors are champing at the bit

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